For years – mostly since the recession – bankers have been predicting a wave of consolidation that would sweep through the industry.
That wave finally began to crash in Richmond in 2014.
The region’s banks were involved in four merger and acquisition deals in 2014 that followed a trend of nationwide consolidation of smaller banks. The flow started with locally based Union First Market’s acquisition of StellarOne Bank. It created a $7 billion behemoth that’s now the biggest community bank in the state.
Richmond-based Xenith Bank got in on the M&A action in March when it announced it would purchase Colonial Virginia Bank in Gloucester. It sealed that deal in July.
Proving that it is firmly back on the right track, Tappahannock-based EVB made a move to expand into the Hampton Roads market with the acquisition of Virginia Company Bank. The $9.6 million deal closed just before Thanksgiving.
The biggest local banking deal announced in 2014 was Richmond-based Franklin Federal Savings Bank’s agreement to be acquired by TowneBank of Hampton Roads. The deal will give TowneBank a major presence in Richmond and adds a large competition for local community banks. It’s set to close on the first of the New Year.
TowneBank’s arrival is part of another wave to hit the local market this year: the trend of out-of-town banks looking to set up shop in Richmond.
Fueled by what they see as a stable economy with plenty of money going around, banks from the Northern Neck, Hampton Roads and North Carolina made their moves into the market. In doing so, they helped create a new financial hub in the city’s West End.
First to arrive was Park Sterling Bank from Charlotte, N.C. The $2 billion bank snatched a team of local banking veterans from StellarOne and picked up an old retail space on Patterson Avenue that will be converted into its first Richmond branch.
Next came Bank of Lancaster from Kilmarnock, Va. The $340 million bank initially took space in a small office and then quickly cut a deal for two standalone branches, including a location at the coveted corner of Libbie and Patterson avenues.
Bank of Lancaster’s Kilmarnock neighbor Chesapeake Bank was the next to arrive in the Libbie-Patterson corridor. The bank had operated somewhat quietly in Richmond since 2011 but plans to make a splash with its $4 million branch buildout of an old Patterson office building.
Further showing the Northern Neck’s love affair with the Richmond banking market, Peoples Community Bank from Montross, Va. made its entrance in Hanover County by hiring a local commercial lender off one of its rivals.
And not far behind TowneBank from Hampton Roads, Chesapeake-based Monarch Bank sought to fight for a piece of the local commercial lending market with the addition of an experienced loan officer and a new presence in Innsbrook.
The rest of the action
Not to be outdone by all the deals and foreign competition, other locally based banks made plenty of their own moves in 2014.
Reversing the trend of banks moving into Richmond, Glen Allen-based Essex Bank expanded further into suburban Maryland by buying a branch from Capital One. Essex also moved into a new home base when it took over space in the former Circuit City headquarters building.
First Capital Bank from Glen Allen went shopping for a new branch and ended up opening inside a newly renovated grocery store.
At least two banks took steps to raise additional capital during the year. Midlothian-based Bank of Virginia brought in $15 million in extra cash after a capital raise funded by a combination of its executives, directors and about half a dozen investment firms.
And lastly, Village Bank, a Midlothian institution that earlier in the year set off on a turnaround plan, put another plan into motion to raise money from a Northern Virginia investor known for buying chunks of community banks.
The pending results of that effort are one of the banking stories to watch in 2015.